Saxo Group Videos

0008_John_Hardy_Stress_Tests_Angus_2014-10-24_Cameron Robertson_Angus Walker.mov

John Hardy, Saxo Bank's Head of FX Strategy, assesses possible market reaction to the results expected this Sunday of the latest and most comprehensive ECB stress tests. The markets seem to be finding it tricky to judge the outcome of the tests, John's view is that: "At issue is how many banks will be found to have insufficient capital for their operations. If a significant number of banks are deemed in need of raising capital, this is a negative for credit and for the euro as they will have to scrape around after capital and sell assets. Any larger institutions on the “fail” list would be an additional possible negative for the euro from this exercise."

It's worth noting that some of the banks being tested are those who were given 'must try harder' notes by examiners last year so to a certain extent expectations are that most banks will pass the tests, even if they have been deemed more thorough on this occasion. Still there's always room for a surprise, a 'big name' fail would move EUR markets for sure, and John explains why he thinks the ECB is in the mood to make examples of any failure.

03:25 minutes
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